Indian Hotels Q2 Results: Punit Chhatwal on Taj Renovations, Growth Outlook & NY Property

MUMBAI – Indian Hotels Company Ltd. (IHCL), the parent of the Taj hotel chain, reported financial results for the second quarter that were in line with market expectations, despite facing headwinds from weather disruptions, a shifted festive calendar, and significant property renovations.

In an interview with CNBC-TV18, IHCL's Managing Director and CEO, Punit Chhatwal, clarified that the year-on-year profit comparison was skewed due to an exceptional accounting gain of ₹307 crores in the same quarter last year, following the consolidation of the 'TajSats' business. Underlying business performance, he noted, showed a 15-16% improvement.

Key Takeaways from the Management Commentary:

• Renovations Largely Complete: Chhatwal announced that the bulk of a ₹250 crore renovation investment across its inventory is now complete, with only 30 rooms at the Taj Palace in Delhi remaining. This means refreshed, premium inventory will be fully available for the critical second half of the year.

  
  

• Strong Second Half Outlook: The company is maintaining its double-digit revenue growth guidance for the full fiscal year. Chhatwal highlighted that Q3 profitability is typically larger than Q1 and Q2 combined, calling it the "bumper quarter." He expressed optimism for the next 60 days, expecting higher pricing power with the renovated rooms back in service.

• Brand-Wise Rate Strategy: The CEO provided insights into the company's pricing strategy:

  • Taj (the backbone brand): Average daily rates are seen in a range of ₹16,000-18,000, with an optimistic scenario pushing towards ₹20,000.

  • Ginger (the budget brand): Aims to cross the ₹4,000-5,000 rate threshold.

• Portfolio Reshuffle: The revenue mix is shifting, with the Taj brand now contributing over 75% of revenue, up from previous years after several properties were upgraded back to the flagship brand. High-growth brands like Ginger are projected to grow at 27% in the remaining six months.

• No Fire Sale for Trophy Assets: Chhatwal firmly denied reports of selling the leasehold rights to its prestigious The Pierre hotel in New York, calling such figures speculative. He stated, "101% we are not looking to sell," emphasizing its value as a trophy asset.

• Margin Expansion Potential: Contrary to concerns that margins have peaked, Chhatwal asserted there is still room for growth. He cited the high margins (up to 60%) from expanding brands like Ginger and a strategic shift towards higher-margin management contracts as key drivers for future margin improvement.

The interview concluded with a confident outlook for IHCL, banking on a strong domestic travel season, a refreshed property portfolio, and a diversified brand strategy to deliver robust growth in the coming quarters.